Business Loan

Capital is a vital component for the success of commerce today. Irrespective of whether a firm is in proprietorship or big organization, finance holds the key to its development, and managing finance is certainly not a child's play. Keeping all this in mind, several institutions have come up with business loans to help budding and existing entrepreneurs.

Very frequently, every company has to face a make-or-break situation which calls for immediate investment to reap long term benefits. If one is not having the finances at that time, he might well opt for a business loan which is designed specifically to fulfill urgent business requirements. These loans not only help in expanding a business, but also play a vital role in modernizing and improving small as well as medium scale business.

Business Loans are offered in two types, Secured and unsecured.

For a Secured Business loan, the borrower needs to pledge something as collateral or security against the loan amount taken. Be it raw material or finished products, land or machinery, anything can be kept as collateral in agreement with the lending party. The borrower can also offer cash advance as collateral as it offers more liquidity and the loan can be availed at lower interest rates and flexible repayment options.

In case of unsecured business loans, here is no requirement of any collateral from the borrower. However, while availing an unsecured business loan, the borrower needs to pay a high interest rate. Moreover, the loan amount is taken for a smaller tenure when compared to a secured loan. According to the their tenure, business loans can be further diversified.

To meet the temporary needs of a business like short term working capital, a short term loan is most apt one, with the repayment time period of a year. An Intermediate Loan is necessary for starting up business to buy inventory, equipment and also increase working capital.

A Long term is necessary for well established business houses who wish to expand, increase their fixed assets or related business acquisitions,with terms that runs for a period of 3-5 years.

Furthermore, drawing the thin line between critical needs and expenses that can be put off till a better financial situation prevails holds the key to prevent one from any financial predicament. Making a single hasty decision without any idea of its impact in your business might prove to be detrimental in the long run. Therefore, one must be very clear of his actuals need and necessities for enhancing and improving his business by borrowing the rights loans with a detailed insight of its pros and cons.

Eligibilty for Secured Business Loan & Unsecured Business Loan

The applicant must meet the below eligibility criteria's


1. Min. age
2. Max. age
3. Minimum income (annual)
4. Minimum loan amount :
5. Maximum loan amount :
6. Min. years of buss. existence :
7. Minimum loan tenure :
8. Maximum loan tenure :
9. Minimum turnover require:
Secured
21 years
65 years
INR 2 Lacs
INR 10 Lacs
INR 25 Cr
3 Yrs
3 year
15 years
INR 1 Cr
Unsecured
22 years
70 years
INR 200000
INR 10,00,000
INR 750000
Not Applicable
3 year
5 years
INR75 Lacs
PURPOSE OF MORTGAGE LOAN
  • Expand your business
  • Renovate your home.
  • Buy a property on which loan is not available.
  • Refinance or Balance Transfer (B.T) on lower rate.
  • Plan a dream wedding.
  • Fund your child's education.
  • Holidays and much more.
HOW DOES IT WORK ?

Mortgage or Loan against property is given as a certain percentage of the Market Value (M.V/ L.T.V Loan to Value) of the property which is generally between 50% and 65%. In case of land/ Commercial Property value to loan amount varies between 50 -65%. This loan belongs to the category of secured loan where there is a guarantee given by the borrower who uses the property as a collateral security. In the event of non paying the loan on schedule, bank after serving proper notices can repossess the property.

Finance on property mortgage can be from 10 Lacs to 5 Cr: It is calculated on EMI paying capacity of the borrower. In general, a person is assumed to be eligible to pay EMI up to 50-55% of total monthly earnings. Therefore for the purpose of obtaining the maximum loan amount a borrower is eligible to obtained by considering:-

  • Total Income: Income/ Earnings from all sources including rent and interest for a month
  • Existing liabilities: EMI on current loan of all types in a month
  • Net amount available to pay EMI for Proposed loan
  • 50-55% of balance left.
  • Rate of interest and tenure on per Lacs factor.
  • Balance amount as above divided by factor per month.

ADVANTAGES OF LOAN AGAINST PROPERTY MORTGAGE

Loan on Property has the greatest advantage over personal loan in terms of :-


  • Amount of loan : Loan against property may get loan upto 5 Cr as against loan of 20 Lacs as personal loan.
  • Tenure and : Mortgage loan tenure is for Max 15 Yrs whereas Personal Loan / Business Loan is for 5 yrs
  • Rate of interest: Secured loan on Property rate of interest ranges from 11.5% to 13.75% whereas Personal Loan rates are 16-18%, and Business Loans rates are 18-20%.
Click Here to Download Checklist before taking Mortgage finance on property
 

Apply Business Loan

Like/Follow LoanMoney on Facebook Follow LoanMoney on Twitter Read LoanMoney Blog Follow LoanMoney on LinkedIn Follow LoanMoney on Google Plus Watch LoanMoney Videos on Youtube